Gilead Sciences, Inc.'s Best Investment of 2017 (Hint: It Wasn't Kite Pharmaceuticals)

Gilead Sciences' (NASDAQ: GILD) share repurchases last year could only be classified as horrible: The company bought back shares between $83.33 and $100 per share as the stock dropped precipitously, ending the year in the low $70s.

This year, however, management has done a much better job, with the biotech paying an average of $69.50 per share for the 10 million shares it repurchased through the first half of the year. As of Tuesday's close, that's a solid 21.6% return. There's no way Gilead is getting that kind of return leaving its cash in the bank.

Of course, unless Gilead reissues and sells the shares through a secondary offering, it's an unrealized gain for the company. The cash is gone, but in exchange, Gilead has a lower share count, which raises the company's earnings per share, a metric many investors use to value companies. Even investors who use free cash flow to value companies will see improved valuation with the lower share count since the price-to-free-cash-flow calculation takes the number of shares into account.

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Source: Fool.com